South Dakota Medical Cannabis Licensing & Business Opportunities
Medical and Recreational Marijuana
South Dakota made history in 2020 by becoming the first state to simultaneously legalize both medical and recreational marijuana through voter initiatives. Measure 26 legalized medical cannabis and established a medical program for qualifying patients, while Amendment A aimed to legalize adult-use cannabis. However, following the election, Governor Kristi Noem filed a lawsuit challenging Amendment A, which led to significant delays. Ultimately, the South Dakota Supreme Court overturned Amendment A with a 4-1 decision, halting the adult-use legalization process. Advocates are currently working towards a new adult-use legalization bill for 2022, with the deadline for ballot inclusion set for early May 2022.
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The South Dakota Department of Health (DOH) regulates and oversees the state’s medical cannabis program and facility licensing. The Department accepts cannabis license applications on a rolling basis and has delegated authority to local municipalities to set their own limits on the number of licenses. While municipalities can limit the number of medical cannabis dispensaries, they cannot ban them outright.
Types of Licenses
South Dakota offers several types of medical cannabis business licenses. The following licenses have been issued:
- Medical Cultivation License: 15 licenses
- Medical Dispensary License: 34 licenses
- Medical Manufacturing License: 3 licenses
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Costs of Acquisition
The state requires a non-refundable application fee of $5,000 for each license application. While South Dakota does not mandate a minimum capital requirement for state cannabis license applications, individual municipalities may impose additional financial requirements, including proof of liquidity and financial stability.
Application Process
The application process for obtaining a medical cannabis business license in South Dakota involves several steps:
- Pre-Application Preparation
- Research Requirements: Understand state and local regulations and requirements for the specific license type.
- Secure Location: Ensure the proposed site complies with local zoning and land use regulations.
- Develop Business Plan: Prepare necessary documentation, including security plans, operational procedures, and financial plans.
- Submit Application
- Complete Forms: Fill out the appropriate application form available on the South Dakota DOH website.
- Pay Fees: Submit the non-refundable application fee of $5,000.
- Provide Documentation: Include detailed plans, proof of legal access to the cultivation or processing site, and any other required documentation.
- Application Review
- DOH Review: The South Dakota DOH reviews applications to ensure compliance with state and federal laws.
- Background Checks: Conducted on all applicants and key personnel.
- Inspection
- Site Inspection: The DOH conducts on-site inspections to verify compliance with regulatory standards.
- Licensing
- Issuance: Upon successful review and inspection, the DOH issues the license, allowing the business to commence operations.
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Restrictions and Compliance
South Dakota cannabis businesses must adhere to various restrictions and compliance requirements:
- Zoning Restrictions: Local municipalities define zoning laws that often restrict cannabis establishments from being located within proximity to certain types of businesses, schools, and other sensitive areas.
- Security Requirements: Licensees must implement comprehensive security measures, including surveillance systems and restricted access protocols.
- Operational Compliance: Businesses must adhere to strict operational standards, including packaging, labeling, and testing requirements.
South Dakota is known for its favorable business climate, characterized by low tax burdens, no income tax, low utility rates, and affordable commercial rent costs. The state has generally embraced the formal legalization of medical cannabis, and opportunities within the cannabis industry continue to grow as more municipalities begin licensing businesses.
Hemp
- Hemp Grower License
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- Description: Allows for the cultivation of industrial hemp.
- Cost: $50 non-refundable application fee; $500 annual licensing fee.
- Restrictions: Growers must ensure that their hemp crops contain no more than 0.3% THC on a dry weight basis.
- Hemp Processor License
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- Description: Allows for the processing of hemp into various products, including fibers, seeds, and extracts.
- Cost: $50 non-refundable application fee; $500 annual licensing fee.
- Restrictions: Processors must comply with state and federal regulations regarding THC levels and product safety standards.
- Pre-Application Preparation
- Research Requirements: Understand all state and federal regulations applicable to hemp cultivation and processing.
- Secure Location: Ensure the proposed cultivation or processing site complies with zoning and land use regulations.
- Develop Business Plan: Prepare necessary documentation, including security plans, operational procedures, and financial plans.
- Submit Application
- Complete Forms: Fill out the appropriate application form available on the DANR website.
- Pay Fees: Submit the non-refundable application fee along with the completed application.
- Provide Documentation: Include detailed site plans, proof of legal access to the cultivation or processing site, and any other required documentation.
- Application Review
- DANR Review: The DANR reviews applications to ensure compliance with state and federal laws.
- Background Checks: Conducted on all applicants and key personnel.
- Inspection
- Site Inspection: The DANR conducts an on-site inspection to verify compliance with regulatory standards.
- Licensing
- Issuance: Upon successful review and inspection, the DANR issues the license, allowing the business to commence operations.
- THC Testing: All hemp and hemp products must be tested to ensure THC levels do not exceed 0.3% on a dry weight basis.
- Record Keeping: Licensees must maintain detailed records of planting, harvesting, and processing activities.
- Reporting Requirements: Regular reports must be submitted to the DANR detailing cultivation and production activities.
- Zoning and Land Use: Cultivation and processing sites must comply with local zoning regulations regarding proximity to schools and other sensitive areas.
Psychedelics
Psychedelics such as psilocybin, LSD, and MDMA are classified as Schedule I controlled substances under both federal law and South Dakota state law. This classification indicates that these substances are considered to have a high potential for abuse, no accepted medical use, and a lack of accepted safety for use under medical supervision. In South Dakota, the possession, sale, or distribution of these substances is illegal and subject to severe penalties. According to the South Dakota Controlled Substances Act (Chapter 34-20B of the South Dakota Codified Laws), these psychedelics are listed under SDCL § 34-20B-14, which categorizes controlled substances into various schedules, with Schedule I including psilocybin, LSD, and MDMA.
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- Ketamine and Telehealth Laws: Ketamine is classified as a Schedule III controlled substance, meaning it is recognized for its medical use but still has the potential for abuse. In South Dakota, ketamine is legally available for medical use, particularly for anesthesia and treatment-resistant depression. The state’s telehealth laws allow for the prescription of controlled substances, including ketamine, under specific conditions. According to SDCL § 34-52-1 et seq., licensed healthcare providers can offer medical services, including the prescription of controlled substances, through telehealth platforms. Providers must establish a valid patient-provider relationship, conduct appropriate assessments, and comply with all applicable regulations to ensure the safety and effectiveness of the treatment.
- State Right to Try: South Dakota’s Right to Try law allows patients with terminal illnesses to access investigational treatments not yet approved by the FDA, which may theoretically include certain psychedelics if they qualify as investigational treatments. This law, codified in SDCL § 34-48-1 et seq., permits terminally ill patients to use investigational drugs, biological products, and devices. While primarily aimed at providing access to life-saving treatments, the law offers a potential pathway for the use of psychedelics under specific conditions if they are part of an investigational study.
- State Religious Exemptions: South Dakota does not have specific statutory exemptions for the religious use of psychedelics. However, religious freedom is protected under both the federal Religious Freedom Restoration Act (RFRA) and the South Dakota Religious Freedom Act. The South Dakota Religious Freedom Act, outlined in SDCL § 1-41-15, provides protections for individuals to practice their religion freely. While the act does not specifically address the use of psychedelics, it offers a framework for potential religious use claims. Such claims would likely face significant legal challenges given the Schedule I status of most psychedelics.
Check Other States Licensing Guide
- Adult Use
- Medical
- Limited Medical
- Illegal
Where to Find Us
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Contact INFO
PHONE:Â 786-526-1155
EMAIL:Â info@mrcannabislaw.com
